New Mexico Publishes Rule on State-Law APR for Small Loans

The New Mexico Financial Institutions Division has published a rule that specifies charges excluded from calculation of the New Mexico-Specific Annual Percentage Rate (NM-APR).  The NM-APR pertains to the calculation of APR under New Mexico’s newly-effective law lowering the usury rate limit on certain small loans to 36%, and the NM-APR includes some charges that are or may be excluded from the APR for purposes of the federal Truth in Lending Act.

The new rule lists nine categories of charges that are “based solely on a borrower’s individual behavior after the extension of credit, [and] cannot reasonably be predicted,” for exclusion from the NM-APR calculation.  It also excludes from the NM-APR calculation fees related to the loan that are paid to public officials, such as recording fees.  And for loans $500 or less, a once-a-year fee of 5% or less of the total loan principal amount may be excluded.

The rule is effective March 29, 2023.